Friday, 12 June 2009

Flipping heck George

Mr George Osborne is the Conservative Shadow Chancellor. The Times reported yesterday that he has been "flipping" his designated second home.

George Osborne “flipped” the designation of his official second home from his London residence to his constituency home after taking out a £450,000 mortgage on the property.

The Shadow Chancellor bought the Cheshire farmhouse close to his constituency ten months before winning the Tatton seat in June 2001.

Instead of taking out a mortgage on the property he funded the purchase by increasing his borrowing on the London home where he and his wife had lived since 1998.

After his election he designated the London house his “second home” with the Commons authorities, even though it was his main residence, so that he could claim the mortgage interest payments on his expenses.

Two years later Mr Osborne took out his first mortgage on the house in Cheshire and made that his official second home. He has since claimed up to £100,000 of taxpayers’ money to cover interest payments on the farmhouse, which is situated on the edge of Peak District National Park.

The arrangement also enabled Mr Osborne to reduce the loan on his London home, which he later sold for £1.45 million, to less than £200,000.

Since his election Mr Osborne has claimed close to the maximum limit for MPs’ second homes under the Additional Cost Allowance (ACA), but denies any wrong-doing. He claims to have made "no personal gain" from the flip, although my reading of his defence - "He said that after being elected an MP he had been advised by the Commons’ Fees Office to declare the London house as his second home so that he could claim expenses for his mortgage interest payments until he was able to change his loan arrangements" - is that the flip was advised and made precisely because it was financially advantageous to him to maximise his claims within the rules to declare that his second home, and later to remortgage and flip.

Labour MP John Mann wants to know what the capital gains tax position was on the sale, having been a fierce critic of Hazel Blears of his own party over CGT.

The Telegraph reports that

"David Cameron has been keen to show that he is ruthless in dealing with his MPs who have been shown to have abused the expenses system, but has been accused of protecting his closest colleagues and friends.

In my view, it significantly underplayed Boris Johnson's expenses compared to other similar cases. This pattern seems interesting but it does not yet prove an intent to go easy on the top Tories - what is newsworthy is a matter of judgment and there is oodles of data to pick through, though The Telegraph following up the Osborne story shows that they do think it reportable.